Agency Brokers Are Predicted to Gain Market Share Away From Bulge-Bracket Firms

Why It's Important: With the market upheaval of the past year, buy-side asset managers and hedge funds witnessed bulge-bracket firms Bear Stearns and Lehman Brothers -- which they relied on for research, DMA trading, clearing and prime brokerage -- go out of business. "The fact that they saw a couple of full-service firms collapse that they never thought could go under probably was an important lesson for the clients," says Sang Lee, managing partner at Aite Group, who notes that since agency brokers are not involved in risky mortgages and do not take complex derivatives onto their balance sheets, they emerged unscathed from the crisis. "Because of the fact that they are agency [brokers], they simply couldn't have gotten into the mess that the other firms have gotten into."

Fewer Block Shares Traded in Networks During Big Downturn

Operators of block crossing networks say they are unfazed by fresh data that suggests that trading in size fell out of favor during the recent extreme volatility in September and October.

New breed of trader heads for Europe

The Midwestern city is widely acknowledged as the birthplace of financial derivatives and home to the loud pit traders long emblematic of the trading world.

But the LSE was not scouting around Chicago's futures exchanges. It was interested in meeting a new breed of trader that traces its origins to those same pits: a small but increasingly important group of electronic trading firms that have quietly built up a massive presence in the US equities markets.

A Quantitative Advantage

In the midst of a global crisis, quant traders have never been busier. What are their technology secrets for success?

Dark Pools Let Big Institutions Trade Quietly

As global stock markets gyrate wildly, institutional traders continue to shift trading from public exchanges to private networks — called dark pools — that are mostly closed to retail investors. 

High-Frequency Traders Flee

Some market volume was missing in action in September and early October. The Securities and Exchange Commission's temporary emergency ban on short sales in financial stocks chased liquidity out of the market, according to several broker-dealers.

PLUS Markets And Direct Edge Announce Transatlantic Co-Operation

PLUS Markets Group plc (“PLUS Markets”) and Direct Edge ECN LLP (“Direct Edge”) confirm today their intention to co-operate with a view to opportunities relating to the listing and trading of equity securities in the United States, the United Kingdom and the European Union. The two parties have entered into a Memorandum of Understanding, which is both non-binding and non-exclusive, as the basis for their future co-operation.

Will the Next Wall Street Be the Last?

The epic credit crisis and its effects are bringing an ignominious end to the Wall Street we've known for many decades. What will replace it? Considering the reactions to other financial crises during our lifetimes -- all of which have been far less severe than the current one -- the future seems to hold two things: a long period of intense risk aversion and the most sweeping regulatory overhaul since the Great Depression.

People in the Trade: Justin Schack

Dark pools are now dominated by a handful of bulge-bracket pools,” said Schack. “The experience a trader gets from these pools is different to the more traditional block crossing networks, such as ITG’s POSIT or Pipeline.”

Toronto Exchange Cuts Prices as Alpha Trading Platform Starts

Alternative trading systems account for 10 percent to 15 percent of average daily volume in the U.S. and Europe, according to Joe Gawronski, president of Rosenblatt Securities Inc., a New York-based brokerage.